• SGMD shareholder letter outlines building blocks of strategic vision
• Chan talks about two themes: geographic expansion for BudCars and Sugarmade’s move to cultivation operations
• BudCars is expanding into North San Francisco Bay area and wine country counties, then Los Angeles

In a letter to shareholders thanking them for their support, Sugarmade (OTCQB: SGMD) CEO Jimmy Chan outlined the “building blocks of a coherent and cohesive strategic vision” and noted that the company is putting in motion “key next steps to manifest that vision and drive strong and sustained shareholder value as a key emerging leader in the California cannabis marketplace”(https://cnw.fm/C3Q5i). 

“I want to highlight two themes that will help to drive our value proposition for shareholders over the intermediate term: geographic expansion for BudCars and our move to vertically integrate through the establishment of cultivation operations,” wrote Chan. “Together, they represent tangible catalysts driving both top and bottom line growth.”

In the letter, Chan noted that Sugarmade is working to “expand the scope, scale and reach of BudCars, a rapidly growing leader in the California cannabis delivery space — where we hold a 40% stake, with an option to take a controlling 70% stake, and where we are actively engaged in strategic and operational execution of the business.”

The letter outlined the dramatic growth BudCars has seen over the past six to eight months, noting that the company has consistently surpassed expectations in several key areas including customer acquisition and per-order volumes. “However, to fuel the next phase of our overarching vision, we must begin to expand our geographic reach,” Chan observed. 

“I have good news: that expansion is officially underway,” Chan continued. “We are expanding BudCars initially into the North San Francisco Bay Area and the Wine Country counties. That will be followed by our grand opening of BudCars Los Angeles, which we anticipate now will take place sometime in November.”

The letter noted that the move into the North Bay Wine Country area, which represents a more than doubling of the company’s total delivery territory, is “ripe with potential.” A recent “North Bay Business Journal” article reported that cannabis-related tax receipts from Sonoma County indicate that the area is seeing growth of 35% in the cannabis space. “As we begin to see tourism return in the wake of the global pandemic health crisis, we anticipate this region to represent one of the strongest bets as well, and we are excited about positioning BudCars to capitalize on that growth trend,” stated Chan.

The expansion into the wine country areas will be followed by the company’s grand opening in Los Angeles, slated for November. “Los Angeles is an enormous market for cannabis sales,” Chan explained. “It stands as perhaps the largest metropolitan cannabis marketplace on the planet. And we will be thrilled to see BudCars lay down roots and start taking market share in the area.”

The shareholder letter also noted that Sugarmade has secured a property zoned for cannabis cultivation and is working with regulators to move forward with plans to start its own cultivation operations. “This move will function to widen our margins on BudCars sales as well as to position Sugarmade to capitalize on growing demand in a chronically undersupplied marketplace,” the letter outlined. “Because of our access to end-market consumers through our BudCars distribution channel, we will also have an advantage over other cultivators in establishing a branded line of cannabis products, further supporting widening margins at each point in the chain.

“These are exciting times for Sugarmade. We have a rapidly growing business, and we are taking concrete steps now to build on that growth,” Chan concluded.

Sugarmade is a product and branding marketing company investing in operations and technologies with disruptive potential. The company’s brand portfolio includes CarryOutsupplies.com, SugarRush(TM) and Budcars.com. Sugarmade is an investor in BudCars and a joint operator of BudCars’ first operating location in Sacramento, California. 

During early 2020, Sugarmade gained a 40% stake in BudCars and in the Sacramento delivery operations via the acquisition of a 40% stake in Indigo Dye Group (Indigo). Under the terms of Sugarmade’s agreement with Indigo, Sugarmade also acquired an option to purchase an additional 30% interest in Indigo, upon the closing of which would provide Sugarmade with a 70% controlling interest. As of the date hereof, this option has not yet been exercised; Sugarmade’s stake in Indigo remains at 40%, and there is no assurance that Sugarmade will exercise the option to acquire an additional 30% interest in Indigo. 

However, since late May 2020, Sugarmade has been actively involved in development of Indigo’s operations with power to direct the activities and significantly impact Indigo’s economic performance. Sugarmade also has obligations to absorb losses and right to receive benefits from Indigo. As such, in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 810-10-25-38A through 25-38J, Indigo is considered a variable interest entity (“VIE”) of Sugarmade.

For more information, visit the company’s website at www.Sugarmade.com. 

NOTE TO INVESTORS: The latest news and updates relating to SGMD are available in the company’s newsroom at http://cnw.fm/SUGAR 

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Sales in the state of New Jersey are projected to increase quickly if voters approve a cannabis legalization referendum on their ballots in the coming week. A plan unveiled by a top lawmaker would even allow the already existing medical cannabis dispensaries in the state to start selling to adults aged 21 years and above within a month of the election.

Nick Scutari, chairman of the state Senate Judiciary Committee, stated in an interview that the most important thing would be to allow people to purchase legal marijuana immediately. However, those who would prefer to grow their marijuana at home wouldn’t be as lucky, seeing as individuals would not be permitted to obtain cannabis from homegrown or illicit sources.

In the interview, Scutari discussed what to expect if voters of New Jersey approved Public Question 1, which would legalize the growing, processing and sale of retail cannabis in the state. The measure is made up of five brief sentences, leaving most of the details up to lawmakers and regulators.

Scutari states that the first step would be for legislators to pass the legislation, starting with setting rules for the new cannabis market. He stated that he wanted the laws to be completed in November, which is when the state would be having the legalization pass.

The plan might be easier said than done though, mainly because dispensaries would be required to certify that they could still meet the current medical patient demand. Additionally, producers would need to confirm whether they are able to increase their supply in order to meet that goal.

The assistant commissioner of the Department of Health, Jeff Brown, stated in a separate interview that if the measure was passed tomorrow, the medical marijuana program, which he oversees, wouldn’t have an operator that would be ready to begin selling adult-use cannabis. He explained that the industry as a collective would have to speed up the whole process to make that happen, especially if companies were to be considered capable of selling in a potential adult-use market.

With dispensaries in the state facing complaints of product shortages and long lines, which have been worsened by the COVID-19 pandemic, this makes the goal that much harder.

Currently, the state has issued licenses to only 12 firms to cultivate, process and retail medical cannabis to more than 90,000 registered patients. However, all may not be lost. A survey conducted earlier this month revealed that 65% of voters in New Jersey were in favor of the measure, with 6% undecided and the remainder opposed.

An interesting cannabis firm that you should watch is Sugarmade Inc. (OTCQB: SGMD). This California-based delivery service provider is enjoying the uptick in delivery services after stores started curtailing their activities in order to adhere to social-distancing guidelines as a result of the COVID-19 pandemic.

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CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.

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Although the state of Massachusetts allows the delivery of both medical and recreational marijuana, creating a system for delivering adult-use marijuana has proven to be quite a challenge. Recently, state marijuana regulators announced that they will be moving forward with plans to allow a new class of cannabis delivery business. The move has been met with both praise and criticism from stakeholders.

On Oct. 20, the state’s Cannabis Control Commission (“CCC”) approved some changes to its draft regulations, allowing standalone cannabis retailers without storefronts to deliver products to customers’ homes. This comes a year after the state allowed the delivery of recreational marijuana but failed to create a regulatory framework to make that delivery work.

Over the months after delivery of recreational cannabis was allowed, advocates have argued that permitting delivery would help licensed businesses compete with the black market, which essentially offers free delivery, on top of reducing the barriers to entry for social equity candidates. The CCC ultimately agreed, creating a new business class that would allow licensed operators to act as a standalone company as well as buy inventory from wholesale suppliers and store it in their own warehouses.

Only applicants in the Cannabis Control Commission’s equity program will be eligible for the courier and delivery license, available for a minimum of three years, a move designed to help communities that were disproportionately affected by the decades-long war on drugs gain a foothold in the industry. According to CCC Chairman Steve Hoffman, however, not everyone is cheering the changes.

For instance, Commonwealth Dispensary Association president David Torrisi has stated that his group is “very disappointed” with the decision. “I don’t think the commission has done enough analysis to determine the impact on the supply chain and the marketplace,” he said. The new direct-to-consumer model has also been criticized by the Massachusetts Municipal Association, which represents city and town governments, raising the same concerns as a bipartisan group of 19 lawmakers.

“The draft regulations create a shadow direct to the consumer marketplace not governed by the licensing requirements and regulations of marijuana retailers,” the lawmakers wrote in a letter to the Cannabis Control Commission. “These draft regulations also significantly change the landscape for cities and towns after many had already engaged in intensive, community-wide conversations about the number and types of marijuana establishments their communities wished to host.”

According to the CCC commissioner, the new model may involve some “unknowns,” but it is crucial as it puts a “dent” in the illicit cannabis market and uplifts the communities that were affected most by the drug war. “We still have a lot of work to do on equity, but I would say this is a giant step forward,” said Hoffman.

An interesting cannabis company you should watch is Sugarmade, Inc. (OTCQB: SGMD). This California-based marijuana delivery company also supports the quick-service restaurant industry, and the company’s prospects seem bright with the ongoing pandemic, which has boosted the activities of delivery companies.

About CNW420

CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.

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